In Decade of GOP Power, Cuts Moved Costs to Local Level

In the second installment of a three-part series on Texas Republicans' lock on state government over the past decade, Ben Philpott of KUT News and the Tribune looks at the debt and tax burdens that have been passed on to municipalities over the years.

by Ben Philpott
Oct. 24, 2012
6 AM

Pflugerville residents were excited about the opening of the State Highway 45 toll road in 2006. The congestion-free highway and its connection to Highway 130 to the east would give them quicker access to a major road. City officials like Victor Gonzales, now the mayor pro tem, hoped the road would provide economic development and tax revenue along its exits. Then the Texas Department of Transportation, which was supervising the construction, came calling.

Audio: Ben Philpott's story for KUT News

“They asked us to contribute $6 million to the opening of a ramp which was already there,” Gonzales said. “And all they had to do was just clear some areas and make it accessible to the exiting traffic.”

That’s a story that has become more and more common across the state, according to Bennett Sandlin, who heads the Texas Municipal League, a lobby group for municipalities of all sizes.

“From 2007 to 2010, we saw a 45 percent increase in the amount of money that cities have to spend to build state highways,” Sandlin said.

Sandlin said the state has essentially decided not to fund new state road construction. But that doesn’t mean cities don’t need the roads. Which is why they’ve increased spending and, in some cases, local debt.

“Cities are issuing debt now to what we call ‘locally participate’ in state highway projects,” he said. “That’s what TxDOT calls it. If you want a project built in your district, the city and, to some degree, the county has to step up and spend the money. And if they don’t have the money sitting in the bank, yes, they have to issue debt to do that.”

Back in Pflugerville, Gonzales said the $6 million dollar ramp was a bitter pill to swallow. But the city was given 30 years to pay it off, and instead of issuing debt, it has been able to budget $200,000 a year to pay back TxDOT. Gonzales said that in the end, the town benefits from having the ramp.

“It did provide a reasonable exit, practical exit for 45 traffic coming into Pflugerville and our residents in the community,” he said. “While a big investment, it was just something we felt like we needed to make.”

As Sandlin said, need or not, the road’s name says it all: State Highway 45. Not Pflugerville Highway or Travis County Highway. But without additional state funds, TxDOT needs local money to build.

That’s not a problem for many in the state’s Republican leadership, including Comptroller Susan Combs.

“I think what Texas has to do is look for ways to encourage governmental entity collaboration to make things more efficient and still deliver services,” Combs said. “Education is a critical service to deliver, transportation’s a critical service to deliver, water’s a critical service to deliver, higher ed, all of these are. And are there any smarter ways to do things.”

But these partnerships, and self-funded projects, have forced many municipalities to issue debt to pay the bills. A recent report by the comptroller’s office shows that local governments have more than doubled their outstanding debt since 2001.

The Texas Municipal League said the report blames local governments for simply paying for state obligations. Combs said that’s not true for all the debt.

“If it’s a city hall, that is not the state’s obligation that I’m aware of,” she said. “If it’s something else that has been a state’s obligation, make that case.”

One possible gray area is funding for local parks. The state used to provide grants to build and improve local parks. Recent budget cuts zeroed out the grant program. Gonzales said the city of Pflugerville had been using those grants.

“So we’re having to bear that responsibility and that obligation because we want to continue to develop those areas to make those a desirable amenity for our residents who are wanting to relocate here and for business and who look at us and say, 'Well, what do you have to offer our employees if they come work in your community?'” he said.

But just because the state paid for it in the past, is it a state responsibility? Gonzales said he can see both sides of the argument. But that doesn’t make the hole in his city budget feel any better.

So if this is the new budget reality, the next step for cities is trying to get more tools to raise the revenue needed to take over state obligations.

A few years ago, a bipartisan bill that would have allowed metro areas to increase local gas taxes for road construction was sent to the governor’s desk, where it was promptly vetoed. And Gonzales said he has heard rumblings in the Legislature of an effort to remove the already limited sales-tax authority given to local governments.

“And that would be a catastrophe in that it leaves a municipality, such as Pflugerville, for example, with the inability to forecast and plan for growth, for infrastructure, for economic development,” he said.

He said that would mean Pflugerville could only maintain what it has and not afford to grow — a position many feel the state is already in.

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